$11.21 Million Collins Street Sale Signals Strength in Melbourne CBD Market

29 May 2023

The demand from owner occupiers and investors for Melbourne CBD office and retail space is intensifying, as four properties at Ground, Level 1, Level 2 and Level 9 at 420 Collins Street, Melbourne have sold following a public sale campaign which attracted a mix of local, interstate, and international interest.

JLL’s Melbourne CBD Sales agents Nick Peden, Josh Rutman, Tim Carr and Mingxuan Li exclusively handled the International Expressions of Interest campaign for 420 Collins Street on behalf of partners at Grant Thornton Australia in their capacity as the Agents for the Mortgagee.

With 30 offers to purchase and over 200 buyer enquiries received by the JLL agents, the campaign generated competitive bidding from motivated owner occupiers and investors based locally and off-shore. The successful purchaser was a local investor who purchased all four properties in-one-line.

The sale price of $11,210,000 reflects a building rate of $8,236/sqm, being a building record and a 55% premium on the sale of Level 6 in the same building in April 2023 by another agent.

Nick Peden, Director and Head of JLL Melbourne CBD Sales said “there’s no doubt that transaction volumes in the Melbourne CBD are lower than the long-term average, however this most recent deal is evidence of the significant current demand for well-located Melbourne CBD real estate. To generate 30 offers to purchase highlights the depth of interest and the current scarcity of opportunities to purchase”.

“The sale of 420 Collins Street is a clear signal of the strong fundamentals of the Melbourne CBD market driving the immense appetite to purchase from the wider buyer market. It was most interesting to see investors compete strongly with owner occupiers, particularly when you consider that the property was offered with vacant possession”, he said.

The Ground floor retail showroom, Level 1, Level 2 and Level 9 provided a total building area of 1,361sqm and was the previous home of Victory Offices.

“We are in discussions with a number of long-term holders of office assets who are assessing the best avenue for maintaining the value of their properties given the mounting challenges with higher vacancy and increasing holding costs such as Land Tax. Some have looked to partner with groups that have expertise in the repositioning of office buildings to ensure tenant retention and drive better returns. Others have simply elected to offload as demand for these buildings remains robust,” Josh Rutman, Executive Director and Head of Capital Markets for Victoria said.